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Legal Funding

Legal Funding

Definition

Legal Funding — sometimes called litigation finance, third-party litigation finance (TPLF), or alternative litigation financing (ALF), this refers to transactions in which a third party provides capital to one of the parties to a legal claim (e.g., a plaintiff, defendant, or law firm). This is done on a nonrecourse basis in exchange for a financial interest in the outcome of the claim or a lien on the law firm. Repayment of the financing is generally contingent on a successful outcome of the underlying claim, whether by way of a judgment or, as is more frequently the case, an out-of-court settlement between the parties. If the litigation is unsuccessful, the lender is owed nothing.

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